Extended stay properties have emerged as a compelling opportunity for private equity firms.
At the International Hospitality Investment Forum, we sat down with Paul Novak, Partner at Whitman Peterson, to explore the unique appeal of this segment and explore the reasons why investors are turning their attentions to extended stay offerings.
Extended stay properties have emerged as a compelling opportunity for private equity firms.
At the International Hospitality Investment Forum, we sat down with Paul Novak, Partner at Whitman Peterson, to explore the unique appeal of this segment and explore the reasons why investors are turning their attentions to extended stay offerings.
During the conversation, Novak highlights the attractive investment formula, particularly in the economy and mid-price segments. These properties, he explains, offer lower investment costs compared to traditional hotels and, coupled with higher gross and net operating profits on average, provides potentially superior returns for investors.
The past performance of extended stay properties during economic downturns is a key factor in their appeal. Novak points out that during the Great Recession and the recent COVID-19 pandemic, economy and mid-price extended stay properties maintained relatively high occupancy rates compared to traditional hotels. This stability, he says, makes them an attractive option for risk-aware investors.
Whitman Peterson's interest in Choice Hotels International's WoodSpring Suites brand underscores the potential in this space. Novak cites the brand's efficient operating model, which allows a 122-room property to operate with just seven full-time employees, as a significant draw for investors.
As the hospitality industry continues to evolve, extended stay properties, particularly in high-growth Sun Belt markets, present an intriguing opportunity for those looking to invest in the real estate sector.
Want to hear more from Paul? Catch the full interview today!
View the transcript here.